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MEA construction market continues growth in Q1, ignores global economic pressures: JLL

MEA construction market continues growth in Q1, ignores global economic pressures: JLL

Arab Finance: The construction market in the Middle East and Africa (MEA) region has maintained growth in the first quarter (Q1) of 2022, despite the obstacles it faced in terms of material prices and labor, according to JLL’s Q1 2022 MEA Market Intelligence report.

The market has gained momentum in Q1 2022, shrugging off a number of economic factors that caused inflationary pressures on cost of materials, the report showed.

These factors involved higher oil and metal prices resulted from ongoing geopolitical tensions, in addition to, higher demand for certain materials and the shortage of others.

Oil prices have directly impacted the construction material prices, raising the costs of production, manufacturing, and transportation, the report added.

The supply price of steel rebar rose by 27%, 17%, and 9% in the UAE, Egypt, and Saudi Arabia, respectively, in the three-month period ended March 31st, it noted.

Regional demand for steel is expected to grow by 4.9% in 2022 to 50.5 million tons, with its prices likely to see a further uptick, it pointed out.

Out of the MEA region’s key markets, Egypt is likely to be more inclined to raise prices of materials due to the requirement set by the Central Bank of Egypt (CBE) regarding the issuance of letters of credit (LC) for importers, along with the recent devaluation of the Egyptian pound.

“Last year, global construction output rose by 4.1%, driven by economic uncertainty stemming from the COVID-19 pandemic. In the MEA region, this trend has continued into 2022, driven by government vision programs and a busy projects market, with the forecast 2022 tender price indices for KSA and the UAE at 6-8% and 4-6% respectively,” Head of Cost Management, Project and Development Services, MEA Gary Tracey said.

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